Recent global events continue to put pressure on the Euro while currencies like the New Zealand dollar have been surprisingly resilient. This imbalance puts EURNZD back in the spotlight, a pair that has now lost 1,600 pips over the last two months and looks to continue that trend with yesterday’s close.
I mentioned the Euro cross on June 27th as it was treading water below the 1.5840 handle. One of the targets for that setup was 1.5400, which was reached and then some during yesterday’s session.
From here, traders can watch for a retest of this level as new resistance. As long as it holds on a daily closing basis, the bias will remain weighted to the downside. The next critical support doesn’t come in until 1.50, giving traders 400 pips of real estate.
Aside from it being a psychological number, the 1.50 area is the 2012 low. It also served as support for a brief period in May of 2015, giving rise to a 3,600 pip rally that ended with last August’s infamous volatility.
As mentioned in my earlier commentary on EURUSD, tomorrow is NFP Friday with the event kicking off at its usual time of 8:30 am EST, so do expect an increase in volatility. Of course, a currency cross like EURNZD is relatively insulated from US-based events, even one as impactful as non-farm payrolls.
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